Negotiation is not always a contest over a fixed amount of value. By understanding what each party genuinely values, it may be possible to create a better agreement for everyone. Read more...
Many people approach negotiation as though they are dividing a fixed pie. If one party receives more, the other must receive less.
This belief encourages people to protect information, make aggressive demands and concentrate on claiming their share. However, it can also prevent them from recognising opportunities to create more value before deciding how that value should be divided.
The strongest negotiators look beyond the most obvious point of disagreement and explore the full range of interests involved.
The Fixed-Pie Assumption
A fixed-pie negotiation occurs when both parties assume their interests are directly opposed.
Price negotiations are a common example. A seller wants a higher price and a buyer wants a lower one, so any movement appears to benefit one side at the expense of the other.
Price may be important, but it is rarely the only variable. Timing, quality, risk, payment terms, service, future work, responsibilities and access to resources may also affect the value of an agreement.
When the parties value these issues differently, opportunities for mutually beneficial trade-offs can emerge.
Positions Are Not the Same as Interests
A position is what someone says they want. An interest is the reason it matters to them.
For example, a supplier may insist on a higher price because they are concerned about cash flow. The buyer may be unable to increase the total budget but could offer faster payment, a longer contract or a different delivery schedule.
Until the underlying interest is understood, both sides may remain trapped in an argument about a single number.
Ask Better Questions
Creating value requires information. Rather than immediately defending your position, ask questions that help you understand the other party’s priorities.
Useful questions include:
Which elements of this agreement matter most to you?
Where do you have flexibility?
What risks are you trying to avoid?
Are there other issues we should include in the discussion?
What would make this agreement more valuable to you?
The purpose is not to force the other party to reveal everything. It is to discover whether differences in priorities can support a better arrangement.
Negotiate Several Issues Together
Discussing one issue at a time can limit the possibilities. Once a single issue has been settled, it can no longer be used as part of a wider exchange.
Bundling several issues allows the parties to compare priorities and make trades. One side may be flexible about timing but care deeply about certainty. The other may accept greater uncertainty in exchange for a longer-term commitment.
These differences can create value that neither party would discover in a one-dimensional negotiation.
Consider the Wider Outcome
A deal can appear successful for the immediate negotiators while producing a poor result for the wider organisation.
Negotiators should consider whether the agreement supports the broader objectives of the business. Winning a concession is not valuable if it damages an important relationship, creates unnecessary costs elsewhere or reduces the overall profitability of the arrangement.
The best result is not necessarily the one that gives your side the largest visible share. It is the one that creates the strongest overall outcome while protecting your essential interests.
The Takeaway
Successful negotiation involves both creating and claiming value.
Before arguing over how to divide the pie, investigate whether it can be made larger. Look beyond the obvious issue, understand the interests behind each position and search for differences that can be turned into productive trade-offs.
This article is an independently written summary of ideas presented in “What People Still Get Wrong About Negotiations” by Max H. Bazerman, published in the January–February 2025 issue of Harvard Business Review. Read the original HBR article for the author’s complete research, analysis and examples.
